A Foundation of Digital Marketing Through a Case Study of Zomato

Every professional Domain requires communication. The communication can be internal as well as for promotional purposes. Promotion as a communication tool has evolved into marketing. The internet space’s equivalent, called digital marketing, booms start-ups into Domain Name Industry (DNI) forerunners. Digital Marketing’s potential is thus a deciding factor in a company’s online success. The e-commerce industry in India has grown manifold using this tool. This discusses the features of Digital Marketing through the lens of Zomato’s success, a food delivery app company. We also introduce a brief history of the internet industry to understand its roots, helping you place well the important role of digital marketing in this context.

The Internet Industry’s Beginnings

Many companies function and grow on the internet. Their business is solely the internet domain name. By investing in the domain name, such as “.com”, these companies are contributing to the success and quality of global supply chains, thereby becoming multinational giants.

The first-ever digital exchange was developed in 1948. Ed Guilbert, an ex-military engineer in the US Army, is the father of Electronic Data Interchange (EDI). The technology helped the army exchange complex information in lucid formats quickly across locations. EDI proliferated in the post-war era into different sectors and entered the commercial space.

Following this, in 1979, the next landmark for online exchanges occurred. Michael Aldrich encountered an idea during grocery purchase procedures. He connected a television set using a telephone cable to the computer that processed purchases. Through this link, the television was modified as a communicator of shopping menus to consumers.

Called “videotex”, the system enabled a human-computer interface through televisions and telecoms to make shopping decisions. As a result, a new trend of shopping from the consumer’s comfort started, eventually becoming e-commerce.

1948

Electronic Data interchange was founded by Ed Guilbert

1979

Michael Aldrich innovates teleshopping; e-commerce is born

1990

ARPANET, the first internet domain provider witnessed the first online transaction

Later followed the invention of the internet. It boomed the acts of E-Commerce and EDI, in the 1990s. The first internet-based product transaction was for cannabis sales to MIT students. Back then, ARPANET was the only domain name supporter.

ARPANET subsequently gave rise to the Domain Name Industry (DNS, or Internet Industry), in which companies called “Internet” or “dot-com companies” emerged. They only possess a domain name, typically “.com”, “.net”, and “.org”, and grow big into a company. They predominantly function only on the internet. Ground offices, if any, are for back-end and logistical support.

Some global dot-com giants today are Amazon and Alibaba. Flipkart, Myntra amongst fashion, Zomato and Swiggy amongst food, and Uber and Ola in the transport sector are Indian examples. The internet industry is vast, yet evolving and not a mere media sensation. These companies are growing into economically influential businesses in India.

Recently, Zomato and Nykaa announced Initial Public Offerings (IPOs) in the market, marking the entry of young businesses into the trading space. Medplus, a pharmaceutical company, and OYO rooms, a hospitality start-up, announced IPOs too. They mark the spread of the internet business across sectors. Pharmeasy, Netmeds, and Dunzo delivery are some other popular examples of e-commerce giants.

Digital Marketing and Its Tools

Overall, we understand that e-commerce has multiplied in size globally. In that light, this paper discusses a crucial element for success in the internet industry – Digital Marketing. It is also called Internet marketing. Thus, it is the marketing equivalent online.

There are four foundational tools called Search Engine Optimization (SEO), Search Engine Marketing (SEM), Social Media Marketing (SMM), and Content Marketing. Digital marketing stimulates sales of online services to the offline community with these tools.

Additionally, digital marketing has several sub-tools of the four core areas, which occupy many digital channels ensuring last-mile promotion to the public. Online Ads, Newsletters, Subscribers’ e-mails, SMS and MMS advertisements, and phone call promotions are some last-mile tools.

Other psychologically powerful tools are influencer marketing, social media marketing, digital campaigning, and data-driven marketing, which particularly target and influence consumer behavior. With Zomato as a case study, this paper discusses how digital marketing tools helped the company grow into a successful large-scale business. We understand the beginnings of the company, briefly, and track its growth to understand how digital marketing grew it.

The Case – Zomato’s Digital Marketing Strategy

Zomato’s growth occurred when Digital Marketing was popularized in India. Their decision to utilize digital marketing was thus favorable. Their strategy included influential and attractive communication, visually and literature-wise, on different media alongside the technical marketing tools.

Thus, their outreach to the public was comprehensive. For example, their SMS messages to the target audience, and attractive advert phrases on billboards showed conviction in marketing themselves. However, being an on-demand delivery app, they must check the traditional methods of outreach too. Zomato is a B2P delivery app. The following sections explain the diversity in Zomato’s marketing.

1. Functionality

The app’s user interface, ease, and accuracy in connecting with restaurants are foundational. Additionally, Zomato, the intermediary here, ensured trust build-up with businesses and consumers. Zomato achieved this with well researched, sorted, and truthful listing of restaurants.

Therefore, the Zomato app has itself become a credible repository of eateries, from which the customers can choose and customize according to their intent. The app streamlines delivery systems and localizes them. Every user has access to sorted lists of eateries in their vicinity as well as those in other locations. The users can also access feedback and real-time complaining systems in case orders and deliveries encounter issues.

A similar facility is available for the businesses too, in the event of faltering customers. Businesses also can cancel orders or make modifications if the app’s food menus are not aligned with the restaurant’s, which leads to ordering items out of stock. As a result, all business logistics are functional with low margins for conflict. This leverages the ease of operations for businesses and consumers through Zomato’s platforms.

2. Comprehensive and Influential Outreach

Zomato executed multiple ideas of outreach in their marketing campaign. Paid advertisements, emailing and SMS lists, and Social media strategy are part of it. Paid advertisements involve consumer targetted ads such as video, images, and audio ads. Digital marketing also optimizes ads for search engines.

By tracking user profiles, ordering patterns such as desired items and time of frequent ordering help customize ads for Zomato’s user base. SMS and emailing strategies are quirky and appealing to consumers. For example, Zomato made a “CV for Biryani” that popularized the dish metaphorically.

Besides, Zomato used pop-culture references from films and shows to sell the food. Zomato also communicated such ideas on their social media platforms. Altogether, the strategy convincingly engaged consumers by transforming food culture into live entertainment.

3. Email Strategies

Zomato’s subscriber emails were highly active. The emails followed entertainment trends that synchronized well with food. The binge-watching culture accompanies food making it a potential niche for Zomato to exploit. Hence, Zomato curated their emails to perform this marketing idea since binge-watchers are engrossed in digital comforts. Their emails will contain multiple subscriptions to digital film channels.

4. Social Media Strategy

On social media, Zomato has presented itself with emotionally appealing posts. They use humor, create comical memes to engage with “meme marketing”, and also communicate in local languages. Zomato’s social media followership amounts to millions, with an age range of 18-35 composing the majority.

The target audience is thus active and knowledgeable, signifying Zomato’s market impact. Zomato also connected with pressing issues and popular discussions in the news to promote themselves. They have made infographics and posters about food in general with references to current issues.

For example, the quote “Make Tacos, Not Walls”, referred to the Mexico-USA border wall. Zomato captured the light of evolving trends to assert their continuous activeness and showed their relevance.

5.  Search Engine Optimization Performance

Search Engine Optimization (SEO) is a powerful promotional tool. Good SEO strategies commute domains to large internet audiences by occupying top ranks in internet search results. This way the bulk of online traffic arrives at domains optimized with SEO. Some important sub-tools of SEO are Keywords, Backlinks, Content, Competitor Analyses, and Domain Referrals.

• Keywords are text phrases for which the audience is bound to perform internet Including more of these words on a website will increase search results preferences. Zomato has created highly dense keyword content, amounting to over eight lakhs. The keywords attracted over 67 lakh internet users.

• Backlinks are hyperlink references on other websites Clicking on them redirects users to your pages. Zomato had amassed more than 1.2 crore backlinks.

• SEO-based content can be various. Blog posts, articles, videos, advertisements, infographics, slideshows, and Zomato’s content types included all of these and were diversified as seen earlier.

• Domain referrals mean the domains which have used your site as a backlink Zomato had over 25,000 different websites, including government ones, referring to their website.

6. Independent Marketing Campaigns

Zomato’s marketing strategies included campaigns independent of the core strategies. Zomato aligned one campaign, the “Zomato Premier League”, with the Indian Premier League for Twenty20 Cricket. The tournament captures attention nationally as India is home to a vast cricket culture.

IPL has emerged as a popular primetime television show, which again fuses well with food while watching. Zomato utilized the potential and offered a series of discounts on various orders. The “Gold Membership Programme” was another campaign, where Zomato offered long-term customer memberships containing complimentary dishes and drinks for dining out orders.

Discussion

Zomato’s Career Progress in the Backdrop of Its Digital Marketing

Zomato began its career as “Foodiebay”, a discovery and reviews platform for restaurants in Delhi. Two IIT graduates founded it when an idea sparked while observing how queues for menus and ordering in restaurants are cumbersome. In India, the dot-com industry started its boom in the early 2000s. By 2010, many internet companies had opened in India.

Zomato was amongst them in 2005, named “foodlet.com”. One of the founders of Zomato, Deepinder Goyal, initially started “foodlet.com” with a different partner. Eventually, the venture receded upon facing challenges. Deepinder goyal persisted with a new partner and redeemed the venture in the name of Foodiebay.

Foodiebay proceeded successfully, since 2008, as a bootstrapped venture. Some prominent investors have contributed to them, especially InfoEdge. Deepinder’s claim states that “foodlet.com” was India’s first-ever food discovery website, which potentially multiplies and fast-tracks customer choices and sales at restaurants.

In the following two years, Foodiebay had garnered significant web traffic, with 2 lakh customers and 8000 discovered restaurants. However, to sustain the growing venture, Deepinder decided to re-brand and expand the scope of services. The partners created the name Zomato and released an App.

The app increased the scope of Zomato’s online presence. However, we must note that Zomato started delivery services only in 2015. Until then, fellow food blogs and discovery apps like TinyOwl and Foodpanda were available. They have closed down due to financial challenges.

Before 2015, demand for delivery services was not high either. After the delivery wing began, its only competitor was Swiggy. The founders thus decided to begin marketing themselves aggressively. As a result, their reach has taken a spot in the services of 15 countries, including Brazil, New Zealand, and Turkey.

Thus, as a challenged company on the internet once, Zomato’s marketing strategy later spearheaded its growth. Back in the early 2000s, when digital marketing was not yet a niche, physical marketing was the method containing billboards, flyers, and branding. As the internet industry boomed, Zomato’s aggressive marketing incidentally aligned with the growth of digital marketing.

Furthermore, digital marketing has accompanied Zomato’s performance until the recent IPO. We can also note that Zomato’s growth during the digital marketing era has pitfalls too. Zomato began acquiring many other start-ups as a part of its marketing strategy and power build-up in the investor space.

Zomato acquired Cibando, an Italian restaurant search service, and Poland’s restaurant finder named Gastronauci. Further, they also acquired US-based portals such as NexTable and Urbanspoon.

Zomato’s Current Market Value

Zomato’s IPO was issued between July 14 to 16 in 2021. Zomato’s current market capital according to the latest quarter (Q3FY22) updates is USD 1.7 billion. The company does not wish to raise money further until the near future and will focus on core business investments.

Zomato has already invested significantly in three companies that grow their core business. The total investment amounts approximately to USD 225 million spread across three companies. The three are emerging quick-commerce businesses called Blinkit, Shiprocket, and Magicpin.

Additionally, Zomato aims to establish a Non-Banking Financial Company (NBFC). With the NBFC, Zomato seeks to participate in short-term credit offers within the food-logistics niche, hoping to support their partners and others such as delivery associates and restaurants.

Besides, the credit will also be extended to customers, including those who have a partnership on Zomato’s platform. Alongside core business, Zomato has also invested in minority equity. Two companies, UrbanPiper and AdOnMo, have Zomato as subscribers, covering around USD 20 million.

To perpetuate more such future efforts, Zomato assigns USD 400 million. Altogether, Zomato’s investment checklist shows a competitive portfolio in the market. Zomato’s investment activity over the last financial year speaks for its successful year-on-year (YoY) growth.

Their annual financial report claims that Zomato experienced a 78% YoY growth from Q3FY2021 (the financial year 2021) to Q3FY2022. The growth amounted to USD 190 million (INR 14.2 billion). Zomato’s core services such as increasing orders due to continuing business have reportedly caused this growth.

Additionally, Zomato’s cost reduction policy has also contributed. They primarily opted for cost reduction as their services were debuting in more than 180 new cities. Thus, Zomato is now servicing more than 700 cities. Subsequently, reducing costs per order has increased the customer base in many cities.

Zomato’s financial growth rounds up with their EBITDA (earnings before interest, taxes, depreciation, and amortization) loss reduction. The reduction reached USD 36 million (INR 2.7 billion) in Q3 from USD 41 million (INR 3.1 billion) in Q2 in FY22. Zomato achieved the reduction by rationalizing its expenses in different business areas.

Image Source: Zomato Quarterly Report

On July 16th, 2021, the closing date of Zomato’s IPO, investors subscribed to more than 71.9 crore shares worth between Rs. 72 to Rs. 76 per share. Qualified Institutional Buyers, Non-Institutional Investors, employees, and retailers have all subscribed to the IPO. The run last year amassed over Rs. 5400 crores. After the flourishing IPO round in 2021, Zomato’s current share price as of mid-May 2022 stands between Rs. 51 to 53.

Reportedly the share prices have depreciated over the last two to three quarters. After crossing the subscription rate of over INR 1 lakh crore during the IPO last year, Zomato’s share price grew to Rs. 133 per share within weeks. Industry analysts critically acclaimed the company’s entry into the market.

However, the market conditions, new competition, and internal expenses have moderated the share price. Current prices are not a result of significant losses but Zomato’s steps towards investing in partnerships.

As we saw earlier from their investment patterns in FY2022, Zomato had to accommodate NBFC establishment expenses, loss-making by firms in which they’ve invested, and employee expenses. Furthermore, Zomato’s IPO subscription audience matches its user group in many ways.

Image Source: Zomato Quarterly Report

Young investors who use tech-enabled trading, who may not be at the helm of rich trading, make up significant subscriptions. And, competition from global giants like Amazon and UBS Securities, as they enter Indian Markets, seem to have dialed the Zomato shares down.

Nevertheless, Zomato’s financial reports and policy direction shows a firm stand in what the company wishes for – building partnerships in the market space to enhance core business.

Conclusion – Digital Marketing as a Versatile Business Accompaniment

Shortly after the acquisition of Urbanspoon, the collaboration failed and terminated 300 employees to manage losses. Zomato’s challenging phase with acquisitions and foreign operations was during 2015 and 2016. Due to the losses, foreign operations were reduced.

The company was able to sustain itself due to its expertise in financial management during crises. To culminate the difficult phase, a cyber-attack had breached millions of users, which made Zomato’s position precarious. We thus understand that Zomato’s career progress was not constantly rising.

It was subject to phases of recessions and business closures. In that light, digital marketing’s gains for Zomato post-2010 and its continued popular online presence aided Zomato’s persisting management strategies. Through the course of profits, losses, growth, and pitfalls, Zomato’s team has resolved to outrun the competition.

We thus understand that nuances of digital marketing have aided and multiplied the performance of Zomato’s creativity, steadfastness, and strategy. Digital marketing has been a backup supporter through Zomato’s challenges proving to be an empowering business tool.